S-curvey

12/18 OpenView Capital Markets Roundup

I enjoyed reading some content on Twitter this week noting that “the latest companies that made it to the $1B ARR Club, you'll notice they are all are product led growth first” (there is a full list of all $1B+ ARR companies here). And this is no surprise – we found in our 2019 SaaS benchmarks survey that product led growth businesses grow more slowly than their sales led peers at first, but faster at scale. And this makes sense – when all investment is going to product and not to sales, you can’t quickly trick 5-10 six-figure customers to pay for the platform. But in sacrificing quick growth (investors favorite) to instead nail product and drive organic adoption companies spend much more time in the “this thing is not going anywhere” stage of the attached s-curve graphic. The outcome though is businesses see a much steeper, sustained, “wow what is happening??” moment to blow past $1B quicker than ever.   

Now, a programming note… The original intent of the Capital Markets Roundup was to provide OpenView’s portfolio executives with weekly updates during the height of COVID-induced market uncertainty in March and April. But, the world has come a long way since then and within the software sector the only uncertainty is now how high prices might go – not so much “is demand going to dry up and are all my customers going to churn”. So it is time for me to rethink my approach, and the cadence of the roundup specifically. In 2021, absent any changes to the macroeconomic or software capital markets environment, I’m signing myself up for a completely undefined release schedule for the roundup (but at least once a month). This will afford me the opportunity to do a few things but most importantly give me time to pack more impactful analysis in the same format (length) as usual.

As it relates to the Capital Markets Roundup s-curve my hope is that we’re in the “Ok it’s still early but where is the traction” stage. We’ve had nearly 1,000 folks subscribe to receive these weekly but (hopefully) the roundup has not crossed an inflection yet. Much like a product led business I hope that by pouring fuel on the fire with more impactful content monthly, I can positively inflect the organic momentum. In 2021, all roundups will be published online here: OpenView Capital Markets Roundup.

Thanks to everyone for the support and kind words over the year and I’m looking forward to sharing my thoughts (albeit less frequently) in 2021! Happy holidays!

OpenView BUILD Podcast

This week on OpenView’s BUILD Podcast… me! My colleague Kyle Poyar and I joined Blake to discuss the 2020 OpenView Expansion SaaS Benchmarks Report. You can listen to the podcast here.

Market & Economic Data

Not too much dramatic action overall towards the end of the year in the SaaS index that we track, likely as managers look to lock in returns and not rock the boat: the public market indices we track all closed the week up: SaaS +0.88%, Dow +0.58%, NASDAQ +3.01%, S&P 500 +1.54% 

What Else We’re Reading

A chat with Maximilian Friedrich, fintech analyst at ARK. From story to the numbers: the steps (valuation modeling).